Sobha Realty Sets Sights On First Green USD Sukuk

Sobha Realty, the Dubai-based luxury developer rated Ba2 by Moody's and BB by S&P, is advancing plans to issue its inaugural green, US dollar‐denominated, Regulation S benchmark sukuk under its established USD 1.5 billion trust issuance programme. The five‐year, fixed‐rate, senior unsecured sukuk offering carries a stable outlook from both agencies.

The firm has shifted from tapping into conventional capital markets toward the growing sustainable finance segment. Preparing to launch its first green sukuk, Sobha Realty underscores its intent to align financing strategies with ESG principles and respond to growing investor demand for environmentally responsible instruments.

The move follows the parent company, PNC Investments LLC, securing an upgrade in April to Ba2/stable from Ba3/stable by Moody's Ratings, while S&P maintains its BB/stable rating-a development that enhances Sobha Realty's credit standing and underlines stronger credit metrics. The upgrade reflects improved revenue, elevated EBITDA performance and healthier debt ratios.

Sobha Realty's prior international sukuk issuance in May saw a keen investor appetite. The USD 500 million, 2029‐maturing Reg S sukuk was met with order books three times the initial offering, pricing at an 8 per cent effective yield following a 37.5‐basis‐point tightening from initial price thoughts of 8.375 per cent. Allocation was split between 61 per cent local and 39 per cent international investors, signalling robust confidence in both the company and Dubai's real estate sector.

The anticipated green sukuk issuance will mark Sobha Realty's entrance into sustainable debt and complement a rising trend in the UAE's property sector, with peers such as Aldar Investment Properties and Omniyat launching significant green sukuk offerings.

Sobha Realty confirmed it has engaged a syndicate of joint lead managers and bookrunners, likely to mirror those from its recent conventional issuance-including Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Arqaam Capital, Dubai Islamic Bank, Emirates NBD Capital, J. P. Morgan, Mashreq, RAKBANK, Sharjah Islamic Bank, Standard Chartered Bank, and Warba Bank-ensuring continuity of expertise in execution.

Expected proceeds from the green sukuk are likely to support eligible green projects, aligning with its ESG objectives and investor expectations, though exact allocations remain unconfirmed. This offering would provide the firm fresh avenues to fund its residential and commercial development pipeline.

Sobha Realty's repeated successes in the sukuk market, combined with its enhanced ratings and ESG pivot, position the company strategically. It indicates both a response to investor preferences and a broader shift within the region toward sustainable finance instruments.

The Dubai real estate market remains vibrant, with high‐quality developers increasingly tapped by global and domestic investors through well‐priced sukuk offerings, reinforcing the sector's appeal in the capital markets.

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